Major indexes finished marginally negative Monday, but losses could have been much worse if Sunday’s overnight selling had not been truncated via Monday’s modest recovery. At one point Sunday night S&P 500 Emini futures contract was negative by nearly 25 points.

None of recent new highs were exceeded Monday (1563.62—S&P 500).

Market volume declined 42% relative to last Friday’s levels.

All cycles remain positive, but weakness in S&P 500 below lower edge of 10-Day Price Channel (1535.90 through Tuesday) would suggest end to short-term advance begun after February 26 intraday lows (1485.01—S&P 500).

Daily MAAD was negative Monday by 3 to 1 and remained below new short to intermediate-term high made March 11. Daily MAAD Ratio was marginally “Overbought” at 1.28.

Daily CPFL was negative by 1.65 to 1 Monday and backed off new short to intermediate high made last Friday. Daily CPFL Ratio was moderately “Overbought” at 1.99.

Cumulative Volume (CV) in both S&P 500 and S&P Emini remains in synch with S&P 500 pricing in that both have moved higher since November lows, but long-term negative CV persists.

Market Overview – What We Think:

While selling in equity futures Sunday evening was followed by modest recovery, but not all, eventual net market losses Monday in face of near-term “Overbought” conditions and slight uptick in volatility could be first signs of trouble with short-term uptrend begun back on February 26.

Staying power of short-term trend will ultimately determine viability of Intermediate Cycle that has been underway since November 16 lows (1343.35—S&P 500).

With longer-term volatility readings approaching lowest levels since late spring and early summer of 2011, some concerns are surfacing as to how much longer this rally can persist since low volatility has coincided with significant market tops over past several years.

But until larger cycles reverse to negative, all Minor Cycle pullbacks must be regarded as just that – short-term corrections within context of larger cycle positives.

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

3/18

3/19

3/20

3/21

3/22

3/22

3/31

S&P 500 Index

SELL1530.82

SELL1535.90

SELL1539.83

SELL1543.93

SELL1547.52

SELL1472.85

SELL1347.47

Dow Jones Industrials

SELL14203.71

SELL14259.31

SELL14303.42

SELL14345.81

SELL14383.59

SELL13578.22

SELL12675.84

NASDAQ Composite

SELL3200.28

SELL3209.77

SELL3217.11

SELL3226.15

SELL3232.16

SELL3098.79

SELL2890.17

Value Line Index

SELL3439.24

SELL3454.04

SELL3466.27

SELL3479.52

SELL3493.34

SELL3297.86

SELL2852.92

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.